I think Aadhaar KYC restriction has basically fucked up all payments banks for the time being.
And if SC ruling next month makes it optional for anything that does not depends upon the Consolidated Fund of India (or whatever it is called)... The cost of manual KYC would make it just too expensive for them to even keep it operating.
Paytm is already venturing into mutual funds and other investments. Google is going to offer loans through Google Pay. I really do not see the target market for payments banks.